INTERNAL AUDITING AND ACCOUNTABILITY OF PUBLIC FUNDS IN LOCAL GOVERNMENT; A CASE STUDY OF MBARARA DISTRICT LOCAL GOVERNMENT

TABLE OF CONTENTS

DECLARATION

APPROVAL

DEDICATION

ACKNOWLEDGMENT iv

TABLE OF CONTENTS v

LIST OF TABLES viii

LIST OF ACRONYMS x

ABSTRACT xi

CHAPTER ONE 1

INTRODUCTION AND BACKGROUND OF THE STUDY 1

1.0 Introduction 1

1.1 Background of the study 1

1.2 Problem Statement 2

1.3 General Objective 2

1.4 Specific Objectives 2

1.5 Research Questions 3

1.6 Scope of the Study 3

1.6.1 Geographical AreaS 3

1.6.2 Content Scope 3

1.6.3 Period! Time scope 3

1.7 Significance of the Study 3

CHAPTER TWO 5

LITERATURE REVIEW 5

2.0 Introduction 5

2.1 The concept of internal auditing 5

2.2 The internal audit procedures performed on utilization of public funds 6

2.3 Challenges faced by internal auditors in ensuring accountability of public funds in local government 11

2.4 The concept of accountability of public funds 12

2.4.1 Tenets of accountability of public funds 14

2.4.2 Relationship between Internal Audit and accountability in local government 17

CHAPTER THREE .20

RESEARCH METHODOLOGY 20

3.0 Introduction 20

3.1 Research Design 20

3.2 Study Population 20

3.3 Sample Frame and sample size 20

3.3.1 Sample size 21

3.4 Sampling Technique 21

3.5 Source of Data 21

3.5.1 Primary Data 21

3.6.1 Questionnaires 21

3.6.2 Interviewing 22

3.7 Data Analysis and Management 22

3.8 Research Procedure 22

3.9 Limitation of the Study 22

CHAPTER FOUR 24

DATA ANALYSIS, RESULTS AND DISCUSSION 24

4.0 Introduction 24

4.1 Background characteristics of respondents 24

4.1.1 Gender 24

4.1.2. Age of the Respondents 25

4.1.3 Education Level of the Respondents 25

4.2 The substantive procedures used in internal auditing in your organization 27

4.2.1 Substantive audit procedures used in Mbarara Municipality to ensure accountability for public funds 27

4.3 The challenges faced by internal auditors of Mbarara Municipality in ensuring accountability for public funds 31

4.4 The Relationship between the Study Variables 38

4.4.1 Internal auditing of public funds 39

4.4.2 Accountability of public funds 39

4.5 Regression Model 39

CHAPTER FIVE  41

SUMMARY OF STUDY FINDINGS, CONCLUSIONS, AND RECOMMENDATIONS 41

5.0 Introduction 41

5.1 Summary of the study findings according to objectives 41

5.1.1 The audit substantive procedures used in internal auditing in Mbarara Municipality 41

5.1.2 The challenges faced by Auditors in ensuring accountability for public funds 41

5.1.3 The relationship between internal auditing and accountability of public funds in Mbarara Municipality 42

5.2 Conclusion 42

5.3 Recommendations 42

5.4 Areas for Further Research 43

REFERENCES 44

APPENDICES 47

APPENDIX I: RESEARCH QUESTIONNAIRES 47

ABSTRACT

Accountability of public funds requires appropriate internal audit practices to enhance efficiency. For the purpose of this study the researcher sought to determine the effect of internal audit and accountability of public funds in local governments in Uganda. Internal audit and accountability of public funds was looked at from the perspective of internal audit standards, professional competency, internal controls and independence of internal audit. The study selected one senior manager in the finance department. The researcher administered a survey questionnaire to each member of the target population since it was the most appropriate tool to gather information. Quantitative analysis and regression analysis were used as data analysis teclmique. Descriptive statistics such as mean, standard deviation and frequency distribution were used in the analysis of data. Data presentation was done by use of tables for ease of understanding and interpretation. From the findings, the study concludes that internal audit standards, independence of internal audit, professional competency and internal control had a positive relationship with the accountability of public funds of local governments, the study found that a unit increase in internal audit standards would lead to increase in accountability of public funds of local governments, a unit increase in independence of internal audit would lead to increase in accountability of public funds of local governments, a unit increase in professional competency would lead to increase in accountability of public funds of local governments and further unit increase in internal control would lead to increase in accountability of public funds of local governments. The study recommends that management in local governments in Uganda should adopt effective internal audit practices such as internal auditing standards, independence of internal audit, professional competency and internal controls to enhance accountability of public funds in local governments.